(Reuters) - U.S. Bancorp (USB.N) reported a higher-than-expected quarterly profit as total loans grew and the fifth-largest U.S. commercial bank set aside less money to cover soured loans.
The Minneapolis-based lender, one of the country’s strongest regional banks, also got a boost in fee income as borrowers refinanced home loans to take advantage of low interest rates.
Mortgage banking revenue for the second-quarter more than doubled to $490 million from a year earlier.
Mortgage-lending has been weak for many banks since the housing crisis and ensuing rash of foreclosures, which discouraged many borrowers from getting into the housing market.
Los Angeles sued U.S. Bancorp on Tuesday, accusing a subsidiary of the bank of becoming one of its biggest slum lords and blighting the city by allowing hundreds of foreclosed homes to fall into disrepair.
U.S. Bancorp’s net income rose to $1.41 billion, or 71 cents per share, from $1.20 billion, or 60 cents per share, a year earlier.
Excluding items, the bank posted a profit of 73 cents per share. Analysts on average had expected the bank to earn 70 cents per share, according to Thomson Reuters I/B/E/S.
“Our results benefited from solid balance sheet and fee income growth this quarter. Both average loans and average deposits increased over the second quarter of last year and the prior quarter,” CEO Richard Davis said in a statement.
Provision for credit losses fell 18 percent to $470 million, while total loans increased 8 percent to $214.06 billion. Net interest income rose to $2.71 billion from $2.54 billion.
The company said it expects net charge-offs and non-performing assets to be modestly lower in the next quarter.
U.S. Bancorp shares, which have gained about 19 percent since the beginning of the year, closed at $32.95 on Tuesday on the New York Stock Exchange. The stock was unchanged in pre-market trading on Wednesday.
Reporting by Tanya Agrawal in Bangalore; Editing by Supriya Kurane and Ted Kerr